The announcement ends a long legal battle that spanned multiple administrations, strained U.S.–China relations, and cast uncertainty over one of America’s most popular social media platforms.

But the solution isn’t entirely new. The joint venture largely follows the contours of “Project Texas,” a proposal from back in 2023 where ByteDance offered to store U.S. user data domestically, set up an independent board, and even let U.S. officials examine its code. Oracle, now a partial owner of the new TikTok U.S. joint venture, was a partner in that proposed deal. (TikTok’s website explaining its proposals—confusingly also called “TikTok USDS”—now redirects to the new joint venture.)

The key difference this time is ownership. Under the current structure, ByteDance will hold just under 20% of the U.S. venture, while new investors—Silver Lake, Oracle, and UAE-based MGX Fund Management—will each control 15%.

Project Texas wasn’t enough to mollify U.S. politicians, who proceeded to pass the Protecting Americans From Foreign Adversary Controlled Applications Act—the “divest or ban” law—in 2024. 

U.S. officials have long warned that TikTok’s access to U.S. user data made it a national security threat, particularly if such data was transferred back to ByteDance’s offices in China where intelligence agencies could, in theory, access it. Others warned that China could leverage TikTok’s content recommendation algorithm to meddle in U.S. politics, perhaps by amplifying some messages or spreading misinformation. (TikTok has denied both accusations.)

ByteDance ultimately was unable to reach a deal with would-be buyers for TikTok, even after the passage of the “divest or ban” law in 2024. When the deadline stipulated by the law ran out in January 2025, ByteDance briefly took TikTok and its other apps offline. Incoming President Donald Trump said he would extend the deadline until a deal could be reached, and TikTok went live again. 

What ByteDance and TikTok keep

In September, Trump announced a deal: ByteDance would sell its U.S. operations to a new group of investors in a deal valued at roughly $14 billion (according to Vice President JD Vance), surprisingly low given TikTok’s U.S. audience.

TikTok USDS’s limited responsibilities may explain why so little money changed hands. The announcement makes clear that “TikTok global’s U.S. entities will manage … certain commercial activities, including e-commerce, advertising, and marketing.” TikTok (and not TikTok USDS) will also maintain how TikTok’s U.S. platform will interact with the global TikTok platform. 

E-commerce is an increasingly lucrative business for ByteDance and TikTok. Creators advertise their own products on the social media app, driving users to a storefront hosted on TikTok; the platform then earns a commission from sales. It’s a business model that ByteDance has perfected in China, where livestreaming e-commerce—think social media hosts hawking products in lengthy videos—is widespread. Chinese business media outlet 36Kr reported that the gross merchandise value of goods sold through Douyin—the version of TikTok for the Chinese market—is around 3.5 trillion yuan, or $500 billion. 

TikTok Shop now makes up almost a fifth of social commerce in the U.S., according to eMarketer, a market research company. It forecasts that share will grow to almost a quarter of the market by 2027.

For ByteDance, social commerce is also a global business. The company first expanded to Southeast Asia in 2020, followed by the U.K. in 2021, and then Spain and Ireland in late 2024. Last year, ByteDance expanded its e-commerce operations to France, Germany, Italy, Mexico, and Brazil. 

ByteDance is also maintaining ownership of its algorithm, merely letting TikTok USDS tweak it for a U.S. audience. This resolves one of the thorniest issues in negotiations over TikTok’s future: Beijing would have needed to approve any outright sale of ByteDance’s algorithm. 

Bloomberg has reported that TikTok USDS may pay ByteDance a licensing fee—possibly up to half of its U.S. profits—for use of that technology.

ByteDance’s focus on AI

ByteDance also has other battles to fight. 

The social media company is one of China’s AI leaders through its flagship model, Doubao. The model powers its Doubao chatbot; ByteDance is also integrating AI into its other consumer apps, like its video-editing program CapCut. It’s also expanding Volcano Engine, its cloud computing service. 

China’s tech sector—including giants like Alibaba and Kuaishou, and small startups like DeepSeek, Moonshot, and MiniMax—is locked in a race to lead the way in AI. That battle can be expensive, as Chinese tech companies hoover up AI chips and tech talent, spend big on data centers, and slash prices to get an edge over their rivals.

ByteDance plans to spend 160 billion yuan ($23 billion) on AI infrastructure this year, the Financial Times reported in December, citing unnamed sources. A hefty chunk of that could go to chips: The South China Morning Post reported in December that ByteDance might spend 100 billion yuan ($14 billion) on Nvidia processors this year, up from 85 billion yuan in 2025. (Alibaba plans to spend over $50 billion on AI infrastructure over the next three years; Alphabet spent around $90 billion in 2025, and plans a “significant increase” in spending this year.)

Getting out of U.S. politics

ByteDance might also be quite happy to wash its hands of an increasingly polarized and politicized U.S. social media landscape. The newly independent TikTok USDS is already battling accusations of interfering in U.S. politics. 

Over the weekend, as anti-ICE protests raged in Minnesota, TikTok users accused the platform of trying to censor anti-Trump content. TikTok USDS blamed a power outage at one of its U.S. data centers and a “cascading systems failure” for the disruption.  

On Monday, California Gov. Gavin Newsom said his office had “received reports—and independently confirmed instances—of suppressed content critical of President Trump,” and ordered the state’s Department of Justice to investigate.

That’s TikTok USDS and its new U.S. owners’ problem to solve—and not ByteDance’s.